Taxpayers will save up to RM1,600 each, says broking firm

 Consumers are seen as likely to increase spending on essential goods, affordable food and beverages and value-focussed retail.

A research note by CIMB Securities said the 2027 budget measures would also benefit producers of consumer staples.

KUALA LUMPUR:

About five million taxpayers will enjoy tax savings of up to RM1,600 each from the income tax relief provided in the 2027 federal budget, according to a research note by stockbroking firm CIMB Securities Sdn Bhd.

It said the budget delivered more generous personal income tax relief than expected, raising the basic individual tax relief from RM9,000 to RM12,000 and reducing tax rates by one percentage point for chargeable income between RM70,001 and RM150,000.

“Businesses also stand to benefit from lower corporate tax rates on micro, small and medium-sized enterprises, and expanded sales tax recovery on qualifying machinery and production inputs,” it added.

CIMB Securities said manufacturers would be allowed to reclaim sales tax on machinery, spare parts and equipment purchased from local traders or distributors. The facility would also cover raw materials used in the production of pharmaceutical products, animal feed, fertilisers and pesticides, it said.

The company said the budget supports household incomes and investment while maintaining fiscal discipline, although higher wages pose margin risks for labour-intensive businesses.

“We view the budget as positive for the consumer sector over the longer term, supported by targeted cash assistance, tax reliefs and other measures aimed at easing living costs, boosting disposable income and sustaining domestic consumption,” it said.

Incremental spending is likely to favour essential goods, affordable food and beverages and value-focussed retail, benefitting retailers such as 99 Speed Mart, Eco-Shop, AEON and Mr DIY.

There would also be spillover benefits to consumer staples producers, including Nestlé Malaysia, QL Resources and Life Water, the company said.

The 17.6% increase in the minimum monthly wage to RM2,000 from June would benefit more than four million workers, although MSMEs with annual sales below RM50 million are exempted.

The increase could raise labour costs for retailers and F&B operators, particularly those with labour-intensive operations.

“The impact could extend beyond minimum-wage earners as companies may need to adjust other salary bands to maintain pay differentials. Nevertheless, higher wages should support household purchasing power and consumption over the longer term,” it said.

CIMB Securities said higher minimum wages would also raise costs for labour-intensive plantation, glove and other manufacturing and services companies, although implementation from June 2027 limits the near-term earnings impact. - FMT